You may have an heir or other beneficiary you worry about when considering the inheritance that you’d like to leave them. Maybe they are a frivolous spender or they constantly seem to make bad investments. You’re worried about giving them a substantial amount of money, which you’ve worked hard to save over the years, because they may quickly waste their inheritance.
At the same time, you don’t want to disinherit them entirely. You know that doing so can cause estate disputes and may cause a rift with other family members. Do you have any other options besides cutting this person out of the will or just accepting that they may waste their inheritance?
Setting up a trust
One potential option that you have is to create a trust. You can use this to specify how the money is distributed by your designated trustee to the beneficiary.
For example, maybe you’d like your heir to spend the money on their college education. The trust could be set up so that they can only use it to pay for college costs until they graduate, when they are allowed to use the remaining balance in any way that they want.
Another option is simply to use a discretionary trust. This puts the trustee in charge of approving spending so the heir doesn’t have the ability to make those choices. However, they still benefit from the money.
Finally, some trusts are based around age. If you think your heir may make more responsible decisions in the future, you could delay the age at which they get their inheritance by designating that payouts don’t begin until they reach 25, 35 or whatever age you wish.
Considering your options
A trust can provide many options for an inheritance. It’s important to carefully consider them as you work through this legal process. Having experienced legal guidance can help.